Diageo jolted by sales curbs on Smirnoff in Delhi

NEW DELHI: The world’s largest drinks company Diageo suffered a setback when Delhi excise department suspended sales of Smirnoff vodka and blocked one of its distributors in recent months. This has caused stock shortage of Smirnoff, the largest selling brand of the London and New York-listed Diageo in the national capital.

With the company’s long-running distributor being blacklisted, Smirnoff will have to wait till the state gives effect to the delayed new excise regime, possibly by November. Meanwhile, Diageo, which now controls United Spirits, has started supplying batches of imported Smirnoff in Delhi, among the largest markets for premium drinks brands.

According to industry sources, the trouble started with excise officials confiscating Smirnoff stock that violated trading regulations. In response to a query, a Diageo spokesperson said, “The Smirnoff stock in question is genuine, duty paid stock of very limited quantity that was incorrectly barcoded due to a minor procedural issue. The issue is dated and was voluntarily brought to the attention of Delhi Excise by Diageo India.”

Despite Diageo’s best efforts to improve supplies through imports and onelitre bottles, many liquor stores across Delhi are still not selling Smirnoff, which has seen muted Indian sales growth in recent past. As a category, vodka sales have remained static around the world, including India. The domestic vodka sales grew from 69.7 million litres in 2015 to 73.5 million litres in 2016, according to Euromonitor.

Smirnoff is the secondlargest selling vodka brand in the country after Magic Moments, which is made by Radico Khaitan, according to Euromonitor. Data revealed that Magic Moments commanded 35% share of the total volume of vodka sold in the country in 2016, compared with 17.3% for Smirnoff, which retails at a significant premium.